Which of the following statements best describes the meaning of consumption in microeconomics?

• A. Consumption is the process by which firms produce goods and services for the market.
• B. Consumption is the total amount of money spent by the government on public goods.
• C. Consumption refers to the use of goods and services by households to satisfy their wants and needs.
• D. Consumption refers to the amount of goods and services exported to other countries.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the concept of consumption in microeconomics. Consumption refers to the use of goods and services by households to satisfy their wants and needs.
2. Step 2: Identify the role of households in the economy. Households are the primary consumers who purchase and use goods and services produced by firms.
3. Step 3: Differentiate consumption from other economic activities such as production, government spending, and exports. Production is done by firms, government spending is on public goods, and exports are goods sold to other countries.
4. Step 4: Recognize that consumption is not about the production or distribution of goods, but about the final use of goods and services by consumers.
5. Step 5: Conclude that the best description of consumption in microeconomics is the use of goods and services by households to satisfy their wants and needs.